[Webinar Recap] Tackling the digitalization challenge: how to get real with digital procurement
To fully realize the potential of digital technology, procurement leaders must tackle the many obstacles holding the function back. Patrick Foelck, Roche’s head of strategy and transformation for procurement, joined our webinar to discuss how he’s tackling the digitalization challenge.
Digital technology has always held out the promise of making business processes and activities quicker, easier and simpler. And to a large extent, it’s fulfilling that promise. The paradox is that – far from being quick, easy and simple – actually transforming business functions to make the most of digital is an incredible challenge.
And for the procurement function, in particular, the difficulties can seem almost insurmountable: CPOs need to balance reliable day-to-day performance with innovation; to deliver new kinds of value while not losing control of costs; and to transform the function for the future while leading a team that may have decades of traditional, pre-digital experience.
To discuss his work transforming the procurement function at pharmaceuticals giant Roche, and to explain how he’s balancing the revolution in the function’s technology with a continual evolution of its operating model, we were joined by Patrick Foelck, Roche’s head of strategy and transformation for procurement.
From a rich and wide-ranging hour-long webinar, here are just a half dozen key takeaways procurement leaders may want to consider when facing digitalization challenges of their own.
Six key points for procurement leaders tackling the digitalization challenge:
1. Realize that technology is only part of the solution
New technology is evolving all the time, with seemingly limitless potential. So there’s a temptation to think that it should somehow offer a shortcut to solving all the problems faced by the procurement function.
But in reality, changes in technology can only ever be half the solution, because new advances in technology require complementary changes in organizations and in working practices. And these changes are difficult to make and take time to get right.
“Technology can only be an enabler,” explained Roche’s Patrick Foelck. “It will never solve the problem for you. It can only solve the problem together with the organization, with the ways of working and processes.”
2. Stop looking for a single solution to all your procurement challenges
One tidy-minded ambition that many procurement professionals will have to learn to let go of is the hope that with one big project – one big purchase and the right set of customizations – you will immediately end up with a single platform that does everything you need, covering all procurement from end to end.
While the right technology can be transformative, it will often be excellent at what it can do well, while being less than ideal for other things you may need. And that’s when you need to work with multiple suppliers – from big established players to the latest niche startups – and combine many different tools and technologies.
“You will never find something that does everything for you, and does it fast and lean and quick,” said Patrick.
We’re going digital. DPW has become an effective partner for us to support the scouting process of new solutions. This exciting new partnership will help us bring new innovation capabilities into Roche, increase our speed of innovation and drive new business value. - Patrick Foelck
3. Combine a stable core with flexibility where you need it
While there won’t be one simple technological solution to all your challenges, that doesn’t mean that a wholly mix-and-match, ad hoc approach will always work either.
The approach Roche has developed is using a main vendor for what the company has identified as being core to the business. “Agility needs some stability,” said Patrick Foelck, “For us, stability is sort of our core, and a reduced end-to-end suite.”
However, to continue to take Roche as an example, if there’s something they need that that vendor doesn’t offer or that it isn’t going to be able to co-create with them, they are free to look elsewhere.
“There is the flexibility for us to step away from certain things,” Patrick explained. And at that point, as Patrick commented, they are free to say, “Let’s find vendors or startups, people who have great ideas, and then complement this to our core.”
4. Focusing on delivering what your internal clients want
To deliver the kind of procurement tools that internal clients will want to use – rather than will merely be required to use by company policy – requires a mindset quite different from that with which many procurement professionals may have begun their careers, or even from that with which they started their digital journey.
Instead of beginning with the technology and the procurement function’s requirements, procurement professionals must learn to make their primary focus what their users want and need.
“If the user experience is good, and if the users like what they are provided with in terms of technology and content, they will use it, and they bring their colleagues,” said Patrick. “With that, we’ll drive more adoption, more usage, but ultimately we can also then channel the users to where we as procurement want them to be. If we do it the other way round, I think we’ll fail.”
5. Don’t aim for the perfect procurement solution: deliver what’s needed now
Creating consumer-level customer experience can be an important way for procurement to entice business colleagues to use procurement platforms, but that doesn’t mean that perfect and perfectly integrated procurement offerings should always be the goal.
Sometimes what is needed is a tool that works well enough right now, rather than something better later.
“Obviously, it would be nice if everything just happens seamlessly,” explained Patrick, “but in our discussions with the business, asking the question, ‘Do you want something tomorrow that’s maybe not working perfectly but does what you need it to do, or do you want to wait five months, and I’ll give you something that looks great, but maybe by that time you don’t need it.’ The answer usually is, ‘Give it to me tomorrow, and let’s work on it together to improve it.”
6. Accept that innovation isn’t easy and there’s always something to learn
For many companies, but especially for large, well-established businesses, truly embracing innovation – with all its risks of false starts and potential failures – can present a serious challenge. And this can be particularly difficult for procurement professionals, who, over decades, may have grown adept at navigating strict processes and procedures.
When working on innovation projects, what is required is a change of mindset. In times past – and still in many business areas and industries – failure may be a totally unacceptable outcome. But in innovation, individual failures are often better regarded as stepping-stones on the way to success.
“You have to focus on the learning aspect, the experience, which is, for me personally, sometimes far more important and of far greater value than delivering the product itself,” said Patrick. “I would be happy if everything that we tried delivers a great outcome, but it always delivers experience and learning.”
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